As inheritance disputes continue to rise across Australia, an estate law expert has warned that the surge is reshaping the legal landscape, changing how lawyers advise clients and prompting courts to reconsider their approach to family provision cases.
In NSW alone, inheritance disputes have nearly tripled since 2005, and they are showing no signs of slowing down, with forecasts suggesting they could quadruple by 2025.
But this surge is not just affecting families and beneficiaries – lawyers and the courts are also feeling the impact.
Toni Whitaker, senior solicitor at Walker Pender Lawyers, cautioned that the sharp rise in inheritance disputes has already begun – and will continue – to significantly reshape how lawyers operate and how courts handle family provision cases.
Explaining the reasons behind this rise, Whitaker identified three key factors driving the growth in inheritance disputes:
“Substantial growth in housing prices means that even a ‘simple’ estate (house, some cash, maybe some super) is valued at over $1 million,” she said.
“Rules around the basis of the retainer have been loosened slightly, in that speculative retainers for estate disputes are now permitted (in [Queensland] it changed in the early 2010s), therefore making estate disputes more attractive to practitioners who may see it as an easy way to make money.”
“A combination of an aging population and blended families.”
Judicial trends reshaping estates
However, this surge in inheritance disputes is not entirely unexpected.
Whitaker explained that the judiciary has been responding to these challenges by focusing on curbing the high costs of estate litigation, urging early settlements to protect estate value.
“There has been, in recent years, a ‘pushback’ from the judiciary about the burden of legal costs on an estate, and encouraging parties to settle early and with a minimum impact on the estate,” she said.
“This is particularly prevalent in ‘modest’ estates in the context of the costs of litigation. Given that the process inevitably involves mediation or some form of ADR, there are many matters [that] are still settling in the absence of judicial consideration.”
While the intentions of the testator remain important, and they are free to make a will on terms they deem appropriate, Whitaker emphasised that there “is an expectation that the testator will provide for their spouse and/or children ‘adequately’.”
“The general thrust of recent decisions has been to ensure fairness notwithstanding the testator’s intentions, and the focus really has been on the legal costs associated with family provision applications and to remind practitioners that they need to ensure a timely and cost-effective settlement,” she said.
With these realities making it challenging for lawyers advising clients in this environment, Whitaker emphasised that practitioners have a responsibility to “ensure their client has realistic expectations” and that they are “genuinely committed to resolve the litigation, not unnecessarily incur costs or litigate by correspondence”.
The challenges for lawyers in an evolving estate law landscape
Amid recent challenges and an evolving judicial approach to estate disputes, Whitaker emphasised that lawyers face new complexities when advising clients on estate planning.
In advising clients on estate planning, Whitaker emphasised the importance of identifying all potential beneficiaries and ensuring clients grasp the consequences of their decisions, enabling them to make informed choices about the terms of their will.
“Our role is to ensure that the client has all the information required to make an informed decision about the terms of their will,” she said.
“It is crucial to identify all those who may be eligible and that the client is aware of the potential impact of favouring one beneficiary over another, even when the reasons for doing so are perfectly rational and fair in the client’s eyes.”
During such discussions with clients, Whitaker emphasised, lawyers must maintain detailed notes of these decisions to clearly reflect the testator’s thinking at the time.
“We as lawyers must ensure we take good notes regarding the discussion as the intentions of the testator are still considered in the face of an application seeking further provision, and the solicitor’s notes can be extremely informative as to the thinking of the testator at the time,” she said.
In the face of increasing litigation risks, she explained, lawyers need to rely on established strategies to protect estates and reduce potential disputes.
“Fortunately, the tried and tested strategies, such as joint tenancies and joint ownership, current binding nominations for superannuation funds are still the most effective way of minimising the risk of litigation. After all, if it is not part of the estate, it is not fodder for a family provision application,” she said.
However, Whitaker warned that these options can be “cost-prohibitive” due to stamp duty, potential capital gains, or impacts on Centrelink benefits.
